I guess we can call this the anti QE. China is taking matters into their own hands by counteracting the negative commodity price increases that have been caused in recent months by the irrational speculation in many markets (via the AP):
“SHANGHAI (AP) — China is banning hoarding of oil, coal and other key commodities, seeking to ensure supplies and cool prices that have surged despite repeated moves to curb inflation.
The government planning agency, in comments published Tuesday, says provinces are forbidden to limit shipments of coal beyond their borders and are required to ensure stable supplies.
Local authorities were ordered to crack down on hoarding, bogus bids meant to drive prices higher, and other illegal practices.
China is trying to cool inflation that surged to a 25-month high in October. Authorities say soaring food prices are mainly to blame, but costs for fuel and other necessities have also jumped, as supplies have run short.”
The irrational QE trade is coming undone piece by piece. The Federal Reserve has caused severe market distortions in recent months based on sheer misconception and misunderstandings of a policy they clearly don’t comprehend. It’s nice to see a foreign government taking matters into their own hands by trying to counteract this blatant attempt to keep asset prices “higher than they otherwise would be”. The Fed isn’t the only one in town who can try to blatantly manipulate market prices. They may have met their match in China.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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